The Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, who made the announcement at a joint press conference held by the Minister of Power, Prof Chinedu Nebo; Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele; and the Chairman of the Nigerian Electricity
Regulatory Commission (NERC), Dr. Sam Amadi; disclosed that the facility was tailored to address the three key challenges facing the power sector..
Mrs. Alison-Madueke listed the three key issues plaguing the power sector as identified by the inter-agency committee to include inadequate gas supply for power generation; misalignment between electricity tariff and the true cost of running electricity business; and the inability of power generation companies to reliably produce the electricity that is possible with reduced volumes of gas.
"With most of the operators having just acquired PHCN successor Generation Companies, they could hardly afford the reduced income due to the shortfall in revenues for reasons that I have just set out.
"The newly privatised companies have borne the brunt of these issues and consequent revenue shortfalls in revenue, since handover last November. This is hampering much needed investment in the sector and has slowed down efforts to improve electricity supply.
"This scenario, which existed for several years has now given way to recent reforms by the Goodluck Jonathan administration and, as a country, we can now address these issues with much more confidence that Nigerians will reap the dividends of increased electricity supply", the Minister stated.
Outlining the scope of the intervention that the N213bn facility is designed to address, Mrs. Alison-Madueke said the fund will be used to settle the legacy gas debts which stands at N36bn; execution of agreed metering programmes and procurement of transformers by distribution companies; and execution of maintenance programmes and procurement of equipment by generation companies.
The intervention fund which, according to the Minister, will be provided by the CBN in collaboration with deposit money banks, will be managed by a dedicated fund manager and beneficiary companies will repay loans obtained from the fund with a first-line charge on their revenues over a 10-year period.
"There will be a moratorium on repayment of the credit facility from the banks, by Distribution Companies, until electricity supply across the country improves. This will ensure that the cost of electricity for ordinary consumers continues to be at affordable levels", she announced.
Speaking further on the modalities for the operation of the intervention fund, the Minister said that Distribution Companies, Generation Companies and the Transmission Company will give commitments to deploy the funds to address specific challenges as preconditions for accessing the fund.
"They will also have to meet commitment to rapidly expand their networks. This will ensure that more Nigerians, especially in rural areas of the country, have access to electricity," she stated.
She expressed optimism that the new measures introduced by the inter-agency committee "will reset the economics of the electric power sector, boost investor confidence and lead to a rapid increase in electricity supply. We envisage stabilising output of power at 5000MW and indeed surpassing this short-term target early in 2015".
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